May 19, 2011

Financial Times: Africa Ripe for Reappraisal

An article published yesterday in the Financial Times (available to subscribers here) has one again highlighted the opportunity for investing in Africa. The article notes that after rebounding from the financial crisis, “sub-Saharan Africa is increasingly viewed as an opportunity rather than a burden.” For example, the article quotes a bank executive attending the World Economic Forum in Cape Town, who noted that “whereas a decade ago such meetings focused on aid and AIDS, the conversation was now about investment and growth.” The article highlights the importance of natural resources for Africa’s growth, as well as interest from other emerging nations: “Growth has been spurred by market liberalisastion and improved public management of finances as well as a boom in the commodities that Africa has in abundance. Perhaps the biggest factor has been the engagement of emerging powers including India and Brazil but led by China. Asian demand for African resources has engendered a revival in the terms on which the continent trades.”
However, the article points out that natural resources are only a part of the story for investors who see opportunity in Africa, noting: “The story is no longer just about resources. The commodity price surge has coincided with the rapid expansion of banking, telecommunications and other services formerly weighed down by the dead hand of the state. This and the sluggish pace of recovery in the developed world have encouraged investors from elsewhere, including Europe and the US, to look at Africa with different eyes.” In addition, the article highlights the consumer growth story (which we have discussed previously here and here, noting that: “Consumer spending is also rising at more than twice the rate of developed countries. The phenomenal growth in telecoms has pointed to a market that few consumer groups and service industries had thought about much before – and one that, if North Africa is included, now exceeds 1bn people.” In fact, the article cites a recent research report by management consultancy A. T. Kearney, which noted that executives at packaged goods companies should no longer be thinking about whether to enter the region, but where and how they should do so. For more information about investing in Africa, please contact Nile Capital Management at (646)367-2820 We know Africa - from Cairo to Capetown.

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